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Growing exodus depriving SA of wealth and skills

Figures show that more people have been leaving the country than in previous years

18 April 2019 - 05:10 David Kaplan and Thomas Höppli

Picture: ISTOCK

SA does not collect data on the numbers of people emigrating. The figures have to be obtained from the countries to which South Africans immigrate, which record the number of residents born in foreign countries.

The major destinations for SA emigrants can be divided into three categories: the five large English-speaking countries – UK, US, Canada, Australia and New Zealand, (the so-called Big 5); the United Arab Emirates (the Gulf); and other developed countries of the Organisation for Economic Co-operation and Development (OECD).

Reports suggest that between 2012 and 2017 the number of individuals in SA with a net worth of over $5m declined by 3,030

In 2000, there were an estimated 435,000 SA nationals in these three combined. Our best estimate for 2017 (extrapolating from earlier data in some cases) is that this number increased by almost 90% to about 820,000, with 76% resident in the Big 5, a little over 12% in the Gulf and almost 12% in the OECD countries for which data are available.

With the exception of only two years, 2011 and 2014, which registered small declines, there has been a steady net growth in the number of SA immigrants recorded in these country categories since 2000, with a particularly strong net increase since 2015 with over 60,000 South Africans emigrating between then and 2017. These figures represent the total number of South Africans living overseas; that is emigration net of return migration.

The number of SA-born immigrants in the Big 5 almost doubled between 2000 and 2017 to over 624,000, an average net increase of about 1,500 people per month. The increase has been most rapid in Australia (130%), with numbers increasing by some 6,200 per annum between 2000 and 2017, an average of more than 500 every month.

It has been slowest in Canada at 28% between 2000 and 2017, where the last few years the number has been rising by only a few hundred a year. The increase has been constant in all countries, except since 2015 when the number of South Africans in the UK and US accelerated significantly.

In 2000 it was estimated that there were fewer than 30,000 South Africans living in the UAE, but by 2017 the number jumped to more than 100,000. The vast majority of emigrants to the Gulf are temporary and many (but not all) will eventually return to SA, although probably only when they retire or after spending their most productive working lives abroad. This means their return to SA only mitigates the brain drain to a limited extent.

Within the OECD country category there have been divergent trends. Spain, Switzerland and the Scandinavian countries, although not major destinations for SA emigrants, have experienced the most rapid rates of increase. A number of countries saw significant increases — France, Ireland and Netherlands, for example. Belgium, Portugal and Israel experienced only slow growth. Three countries that have a significant number of SA residents saw a decline — Italy, Germany, and most significantly Greece, where the number of SA-born residents has declined precipitously.

Overall, though, all three country categories show a marked increase in the number of SA immigrants between 2015 and 2017, and there are indications that this rate of increase accelerated significantly in 2018 and may accelerate even further in 2019. In response to our queries, one immigration consultancy in Australia reported that the number of inquiries from South Africans processed in 2018 was 77% higher than in 2015. For the first two months of 2019 the increase compared with 2015 was 228%.

The most comprehensive data on the education and skills of SA immigrants is from the Australian Bureau of Statistics (ABS). Australia accounts for more than a fifth of SA emigrants (22.6%), and a large proportion of them are well educated.

According to the ABS, in 2016 more than two thirds of SA immigrants over the age of 15 had either a bachelor’s degree and above (38.5%), an advanced diploma or diploma (15.6%) or a level III or IV certificate (13.2%). Only 8.5% had less than 12 years of education. The proportion of highly educated SA immigrants was significantly higher than for the total population in Australia, where 22% have a bachelor degree and above and 8.9% an advanced diploma or diploma.

More than half of SA immigrants in Australia in 2016 were classified as either professionals (34.1%) or managers (16.9%). A further 13.8% were in clerical and administration, 11.5% technicians and trades, and 8.4% in community and personal services.

According to Australian government data, in the period 2011 to 2015 the top five occupations of entering SA nationals (in descending order) were accountants, ICT and software-related, engineers, teachers, and metal fitters and machinists. The weekly median family income of SA-born immigrants in 2016 was 39% higher than the median family income of the Australian-born population, a reflection of their relative skills and occupational status.

Emigration also leads to outflows of wealth from SA. There is no comprehensive data on the magnitude of wealth outflows, but there are indications. The first is sales of residential property. According to the FNB property barometer, the proportion of home sellers citing emigration has increased almost fourfold since 2013 to 7.8% in 2018. It is even higher in the upper income brackets.

The second indication is the number of high-worth individuals. Reports suggest that between 2012 and 2017 the number of individuals in SA with a net worth of over $5m declined by 3,030 — almost a quarter of the total — while the number of individuals with a net worth of over $50m declined by 140, more than a fifth of the total. The number of individuals with a net worth over $500m remained constant at 30.

While the reduced numbers of wealthy individuals is primarily a result of economic factors — the declining value of the currency and the slow rate of growth of the economy, among others — emigration has certainly played a part.

According to the SA report of AfrAsia Bank, nine SA-born billionaires have left the country; only five remain. Moreover, indications are that the rate of emigration of the wealthy will accelerate further. In 2018, Frank Knight conducted surveys on emigration plans and trends among ultra-high net worth individuals in Africa (largely South African). Almost 28% had dual citizenship or a second passport; 27% were considering getting a second passport, and 19% were considering permanently moving to another country.

Accelerated emigration of SA’s wealthy individuals would be in line with expectations for the overall rate of emigration from SA, and is cause for concern. Accelerated rates of emigration will exacerbate the chronic skills shortage in the country, inhibit already low rates of growth and further constrain government’s limited capacity to raise tax revenues.

• Höppli is an economist, and Kaplan professor emeritus at the University of Cape Town School of Economics.